Rejected for credit? It could be because you're dead

Rejected for a loan because your credit history was
shut down? It could be because the credit bureaus think you're dead.

About 1,000 people per month get mistakenly declared
dead by the Social Security Administration every year, according to government estimates. Many more get falsely reported as deceased by their bank, credit card issuer or by one of the big three credit bureaus -- Experian, Equifax
or TransUnion.

Often, when victims find out that they have been
accidentally declared dead, they assume that proving they're alive and well
will be an easy fix. Instead, they find they will have to wait a month or more before lenders will acknowledge their living, breathing, bill-paying status.

Or, in more extreme cases, they're told before 30
days have passed that they must be mistaken. They can't possibly be alive right
now because investigators have looked into their case and records show they've
passed away.

"There's a sense of powerlessness, a sense that you
are disenfranchised," says James Willis, a journalist and professor based in
California who was mistakenly declared dead by Capital One two years ago.
Willis had just started a new job and was getting ready to buy a new house when
he learned that, according to the credit reporting agency Experian, he had
apparently just died.

"The news of my demise came in the form of a credit
alert from Experian," Willis recalls. "It said a potentially negative item had
just been posted to my credit report."

When Willis followed up, he learned that one of his
lenders, Capital One, had written off his charges as uncollectible because they
believed that he was dead. Experian then froze his report, shutting out the
mortgage company that Willis had enlisted to help him buy his house.

"When a
credit card company declares you dead, then they send that notice on to the
credit reporting agencies and then your credit history gets locked down,"
explains Willis. "You cannot access it. Nobody can access it because of the
fact they assume you're dead."

At that point, getting mistakenly declared dead
shifts from being a minor annoyance to potentially becoming a big and costly
problem, says Jim Francis, a consumer lawyer in Philadelphia who has
represented multiple clients who have been killed off on paper.

"The real problem with being marked as deceased on a
credit account is you can't get a credit score," says Francis. "It's impossible
to get credit to the extent that most banks, mortgages, car dealerships require
a credit score to assess risk. They have no possibility of getting that and so
there's no way of getting credit."

"That's the real problem and the real harm," he
adds.

Getting
exhumed takes timeThe
amount of time it takes for killed-off consumers to be brought back to life can
also hurt, say consumer advocates. Credit bureaus have 30 days under the Fair Credit Reporting Act
to investigate a credit dispute and verify whether the
information they have on file is correct.

I don't think you're dead. I know you're alive but our computer is in
control and our computer has 30 days to rectify the situation.

-- Customer service representative
Capital One

However, that's a long time to wait if a consumer is
in the midst of applying for a time-sensitive loan, such as a mortgage, or is
applying for a job and needs an immediate credit check, says Todd Mark, vice
president for education at the Consumer Credit Counseling Service of Greater
Dallas. "Those are situations where you don't want to have to wait 30 days or
longer for a dispute to be initiated," says Mark.

In the meantime, customer service representatives
are rarely able to help speed up the process, which can be frustrating for a
consumer who's on a tight deadline, says James Willis, the customer who was
accidentally killed off by Capital One.

Short on time and anxious to erase Capital One's
mistake, Willis says he spent several hours on the phone, trying to get someone
to help him in time to close on his home loan.

However, the staff at Capital One told him there was
nothing they could do. Instead, Willis had to wait for the bank's computers to
process an investigation into the mistake and report back to the credit bureaus, he says.

"I don't think you're dead," Willis says one
customer service representative told him over the phone. "I know you're alive
but our computer is in control and our computer has 30 days to rectify the
situation."

"That's when it took kind of a leap into the
twilight zone for me," says Willis. "Even though the individuals at Capital One
believed I was alive, no one seemed to be able to do anything about the
computer."

Eventually, Capital One figured out that it had
mixed Willis up with his deceased father, James Willis Sr., and restored his
account. However, by that time, Willis had already spent countless hours trying
to resuscitate his credit.

"That's what started weighing on me," says Willis of
the time spent trying to get the mistake corrected. "I was starting a new job
at the time and it was just a lot of time devoted to it, a lot of distraction
that was caused by this."

"One of the frustrating things is to try to get them
to understand that your time is valuable," he adds.

It may take months -- or years -- to be rebornWillis
was lucky. He was able to get his dispute
resolved in less than a month and closed
on his house just in time. However,
other consumers have had to wait much longer to get their financial lives back
on track.

They tried sending detailed disputes ... And surprisingly, in a bizarre fashion, the credit reporting agency verified them as being deceased.

-- Jim Francis
Consumer lawyer

Jim Francis, the consumer lawyer in Philadelphia,
says that many of his clients came to him in desperation after submitting their
disputes through the credit reporting agencies' automated dispute process and
getting nowhere.

"They tried sending detailed disputes, documentation
[saying], 'Here I am. This is my Social Security number. This is obviously not
me.' And surprisingly, in a bizarre fashion, the credit reporting agency
verified them as being deceased," he says.

That's when their lives flipped upside down. Not
only could they not get credit. They had no idea how long it would take the credit bureaus to figure out the mistake.

ARE YOU A CREDIT ZOMBIE?
WHAT TO DO

If you, too, find that you are having trouble proving to lenders that you're alive, don't panic.

Prepare a detailed notarized dispute for the credit reporting agencies that includes documentation proving you're alive and send it by certified mail, say experts.

Also be sure to send a notarized copy of your dispute and copies of supporting evidence to any furnisher or creditor that you believe may be responsible for the mistake. If you believe the Social Security Administration is responsible for the mistake, contact your local Social Security office directly.

In addition, write down the name and number of anyone you talk to over the phone, including what they promised they would do for you, says Consumer Credit Counseling Service of Dallas's Todd Mark. "Create your own paper trail at home and don't be afraid to step up who you talk to," he says.

If nothing works and your credit information is still shut down, seek legal help. Under the Fair Credit Reporting Act, you are entitled to seek legal action when legitimate errors -- such as being mistakenly declared dead -- aren't corrected in a reasonable period of time.

Finally, don't forget to remain calm, says recently exhumed consumer James Willis. If you believe you've located the source of the error, try calling repeatedly until you get a sympathetic voice on the other line, he says."I found one of those individuals with Capital One and I found one with Equifax," says Willis.

Explain your situation and understand that they are at the low end of the totem pole and may not be able to do much to help you, he adds. "The natural tendency is just to boil up, but it doesn't help anyone to do that. You just have to try to reason with them. Try to remain calm and reasoned and try not to appear like a nut."

Credit reporting agencies are required by the Fair
Credit Reporting Act to thoroughly investigate any item on a credit report that
the consumer says is wrong. However, in many cases, Francis says, the original
furnisher of the information is the one who got the record wrong, not the
credit bureau, and the credit reporting agencies don't follow up.

"The credit reporting agencies don't conduct any
type of independent investigation," says Francis. Instead, the credit bureaus
send a consumer's dispute to the organization that supplied the information and
rely on them to look into whether a consumer is really dead. "That's how things
are getting verified," he says.

If a creditor looks at its records and sees that the
consumer is listed in its files as deceased, it doesn't always dig further, says
Francis. "They're not really that interested in conducting investigations,
either," he says. "It's not really a profit center for them so they are doing
the bare minimum." As a result, the creditor sometimes ends up repeating the
same inaccurate information to the credit bureaus.

At that point, consumers have few options but to
wait and try again.

Banks and other types of creditors are required by
law to thoroughly investigate whether the information they have on file is
correct, says Francis. "They have the same duty that the credit reporting
agency has," he says. "Both the credit reporting agency and the furnisher must
conduct a reasonable investigation." So consumers have the legal ammunition to
fight back against credit reporting agencies' and furnishers' claims that they
are dead.

However, they have little power to speed up the
process and get their credit reports
unlocked when they need them.

"It takes a really persistent effort" to get a
dispute resolved, says Nina Heck, director of the Consumer Credit Counseling
Service of Maryland and Delaware. "Sometimes [a dispute] has to be resubmitted
and resubmitted."

Heck has worked with multiple clients in the past
who have been mistakenly declared dead and she says it often occurs because a
client's name was mixed up with someone else.

When that happens, proving you are who you say you
are can be a challenge, she says. "First, you have to prove that you are you
and then you have to be able to validate that this [other] person is deceased,"
says Heck.

Beware
of the Death Master File
Consumers who have been accidentally killed off by the Social Security
Administration, rather than a creditor, have it even worse. The Social Security
Administration keeps a master list called the Death Master File that lists
everyone in the United States who has died. Sometimes, a person will get mixed
up with someone else or a typographical error will cause them to be listed as
deceased.

Once a consumer is listed as dead in the Death
Master File, numerous stakeholders are notified, including the credit bureaus and
other government agencies. Soon after, consumers' credit reports are shut down,
their benefits are cut off and they are barred from getting a new job because
they don't have a living Social Security number.

Getting taken off the Death Master File, meanwhile,
can sometimes take years, according to numerous press reports, financially
devastating those involved.

"As many news reports have accounted, incorrect
death reports have created severe personal and financial hardship for those who
are erroneously listed as deceased," said U.S. Rep. Sam Johnson of Texas in
February, announcing a congressional hearing on the Death Master File's
accuracy. "Those affected have experienced termination of benefits, rejected
credit, declined mortgages and other devastating consequences, while their
personal and private information is publicly exposed."

Published: September 4, 2012

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